Law firm Allens, which is representing PTTEP, attempted to block the seaweed farmers from using the term on the basis that they were not suitably qualified to identify oil.
However Justice David Yates who is presiding over the case begged to differ, saying the word ‘oil' was "after all an ordinary English word" that denoted a particular matter or thing.
The ruling now allows the seaweed farmers to submit their evidence unchanged, according to legal publication Lawyerly.
The seaweed farmers, represented by Maurice Blackburn, are suing PTTEP over alleged damages to their crops and seaweed farms following the massive Montara oil spill in the Timor Sea in 2009.
The seaweed farmers are seeking over A$200 million worth of compensation.
"Our experts contend that approximately 6,000 barrels of oil per day contaminated the sea - that's akin to pouring over 70 million litres of sludge into the ocean over the months that the environmental disaster dragged on for," Maurice Blackburn managing principle lawyer Ben Slade said in a statement provided to Energy News.
Lead plaintiff for the action is Daniel Sanda. Sanda's case claims that the seaweed industry in Rote Ndao and Kupang, Indonesia was destroyed by the oil company's failure to safely operate the Montara Wellhead.
Over 30 Indonesian witnesses - including seaweed farmers who allegedly witnessed the oil arrive and destroy their crops - and several internationally renowned experts on oil spill modelling, chemistry and environmental impact will give evidence in the trial.
According to estimates from Geoscience Australia at the time, more than 2,000 barrels of oil per day was spilled into the surrounding water each day. However PTTEP claims it was 400bopd.
The trial is expected to sit for 10 weeks. Justice David Yates is presiding over the case.